A new report by Canada’s auditor general says the 10-year plan to cut federal government office space in half is not on track.
One of eight performance audits released Tuesday morning by Auditor General Karen Hogan found the reduction effort launched in 2019 has only just begun, “mainly because of a lack of funding.”
Prior to the COVID-19 pandemic, Public Services and Procurement Canada (PSPC) estimated 50 per cent of federal office space was underused. The department began planning to dispose of certain properties to be used for other purposes such as housing.
But in the six years since, the portfolio of federal office space has barely dropped, from 64.6 million square feet to 63.5 million square feet, Hogan found.
Last year, the federal government announced it would provide $1.1 billion to help PSPC reach its 50 per cent reduction target over 10 years. The department has estimated reaching that goal would save $3.9 billion over the next decade, plus ongoing savings of just under $1 billion per year.
“The funding is intended to help accelerate the termination of leases and disposal of vacant or underused federal properties and reduce maintenance and operating costs,” the audit stated.
However, PSPC currently projects a reduction of just 33 per cent within that 10-year time frame.
The overall cost of operating the federal government’s buildings totalled about $2.14 billion in the 2023-2024 fiscal year.
Filling vacant spaces
The plan to drastically reduce federal office space is being seen by some as a golden opportunity to add to Canada’s much-needed affordable housing stock.
“If well managed, repurposing surplus federal land and buildings can help increase the supply of sustainable, accessible, and affordable housing,” the audit agreed.
In 2018, the Canada Mortgage and Housing Corporation (CMHC) was allocated $200 million over 10 years for the Federal Lands Initiative, a program designed to sell off surplus federal property to develop into affordable housing.
The initiative’s initial target was to “secure commitments” to build 4,000 housing units by 2027-2028. The auditor general found CMHC is on track to secure those commitments, but predicts only 1,951 units will actually be built by that deadline.
“The initiative did not maximize access to affordable housing for those with the greatest need,” the audit found.
The auditor general also found 39 per cent of the projects supported by the Federal Lands Initiative won’t serve Canadians living in areas where the need for housing is the greatest.
“This is especially concerning since the CMHC’s 2022 Rental Market Survey showed that the lowest-income households had access to a very small share of the rental stock, about less than five per cent in major centres, one per cent in Vancouver, and almost none in major Ontario cities,” the audit reads.
CMHC said that’s because there’s a limited stock of government properties available for housing conversion in some of those regions.
Additionally, the audit found CMHC met the affordability requirement under the initiative, but that requirement “was not designed to provide housing that would be affordable for the lowest-income households.”
Finally, the auditor found the initiative has only supported rental housing instead of a wider range including emergency shelters, transitional housing and social housing.
CMHC officials told the auditor general this is because the initiative “provides land at a discounted price but doesn’t provide continuing financial support,” making it harder to accommodate other types of housing.
